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   Course Title    Economics of European Integration and Ukraine
Lecturer    Olexander Babanin
Institution    Kyiv Istitute for Business and Technology
Country    Ukraine


Economics of European Integration and Ukraine is quite important course for economists. Accession to the European Union is a long-term objective for Ukraine. However, in 2004 the candidates of the first wave of accession – Ukraine’s closest neighbors – Poland, Hungary, and the Czech Republic, as well as Estonia may join the European free market. The whole situation in Ukraine’s relationships with the EU as one of the major trade partners will change dramatically. Therefore, Ukraine has to plan an adequate policy to meet new challenges in a context of the EU expansion and eurozone spreading out.

Course objectives

  • to introduce students to the theories of economic and monetary integration and their application in a European context;

  • to provide a detailed analysis of some priorities in the development of the European Union, first of all, the development of the European Monetary System and Economic and Monetary Union;

  • to analyze the decade of transition of Ukraine from the historically planned economy to a more democratic market-oriented society;

  • to focus on barriers for economic growth and European integration in Ukraine (slow privatization, over-regulation, tariffs and non-tariff restrictions in foreign trade, etc.);

  • to analyze the perspectives of Ukraine’s cooperation with the EU and harmonization of legislation of Ukraine with that of the European Union.

Course description

The course provides an economic analysis of the rationale for countries coming together to form the European Economic Community and its development into the European Union. The transition period (1990-2002) in Ukraine and its successes and failures will be considered. The special attention will be paid to perspectives of Ukraine’s cooperation and accession to the EU in the context of the coming enlargement of the European Union.


J. van Brabant (ed.), Remaking Europe. The European Union and Transition Economies, Rowman and Littlefield Publishers, 1999

D. Dyker (ed.), The European Economy, 2nd ed., Longman, 1998

P. de Grauwe, The Economics of Monetary Union, 4th ed., Oxford University Press, 2000

J. D. Hansen and J. U-M. Nielsen, An Economic Analysis of the EC, 2nd ed., McGraw Hill, 1997

V. Heyets, The Economy of Ukraine: Results of Transformation and Growth Perspectives, Kyiv, Fort, 2000

W. Molle, The Economics of European Integration, 3rd ed., Ashgate, 1997

P. Robson, The Economics of International Integration, 4th ed., Routledge, 1998


Tentative schedule of lectures

Lecture 1

Customs Union Theory (EU, CIS Customs Union)

Review of basic trade theory

The theory of customs unions

Trade creation and diversion

Patterns of trade and integration

Lecture 2

Competitiveness and the Single Market

From Customs Union to ingle Market

The Cecchini study and its critique

Factor markets and social policies

Labor migration

Lecture 3

Imperfect Competition and the Economic Geography of the EU

Modeling imperfect competition

Implications for location and trade

The role of transport in the EU

Regional specialization

Lecture 4

Theory of Optimum Currency Areas

The Mundell-Fleming model

Monetary policy in closed and open economies

Exchange rate mechanisms

Costs and benefits of a common currency

Lecture 5

Monetary Integration in Europe

Bretton Woods and its collapse

The Werner plan

Stages to EMU

Maastricht convergence criteria (fiscal, monetary & exchange rate)

Lecture 6

Fiscal Policy and the EU Budget

The role of fiscal policy in EMU

The EU budget (stabilization, distribution, efficiency), its rationale

Main elements in the EU budget, revenue and expenditure

Pro and contra an expanded EU budget

Lecture 7

Growth in Europe (EU 1950-2002)

Explanation of growth in Europe, 1950-2002

Convergence and divergence

The spatial impact of the single market

The competitiveness and cohesion objectives

Lecture 8

Transition in the Central and Eastern Europe, 1989-2002

A COMECON collapse

Small and medium-sized businesses development

Rapid and slow growers

Regional integration

Lecture 9

Transition in Ukraine, 1990-2002. Macroeconomic Stabilization

Trade liberalization

Price liberalization and inflation

Development administration

Debt growth

Lecture 10

Transition in Ukraine, 1990-2002. Enterprise Restructuring

Deregulation of the economy

Licensing, adjustment to ISO standards


Foreign and domestic investment

Lecture 11

Transition in Ukraine, 1990-2002. Fiscal and Budget Policy

Changes in tax legislation

Budget and wage arrears

National and local budgets

Budget Code

Lecture 12

Transition in Ukraine, 1990-2002. Human Development

Social safety net collapse

Labor migration

Health deterioration

Knowledge assimilation

Lecture 13

Prospects for EU Enlargement and Ukraine

Ukraine and Central European Free Trade Area

Ukraine-EU Partnership and Cooperation Agreement

Antidumping sanctions

Harmonization of the Ukrainian legislation with that of the EU

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